EXCLUSIVE: A2 Global CEO on Navigating Electronics Supply Chain Challenges

Welcome to an exclusive Electropages interview with Frank Cavallaro, Chief Executive Officer for A2 Global Electronics + Solutions, a distributor of electronic components and supply chain services. With more than 25 years of successful leadership experience within the global technology distribution industry, Mr. Cavallaro is a seasoned executive who brings global market strategy and deep operating expertise. 

Part one of this interview covers supply chain management, market trends & forecasts, looking at current global events and their impact on the electronic component supply chain, strategies that buyers can employ to mitigate these threats and how demand for semiconductors is expected to evolve over the rest of the decade.

Supply Chain Management

How are current global events impacting the electronic components supply chain, and what changes are anticipated in 2024?

Infrastructure costs, geopolitical events, natural disasters, natural resource shortages, and skills shortages are all contributing to an unsteady supply chain and likely sourcing challenges for select node sizes the next 5 years.

Additionally, the widespread adoption of artificial intelligence (AI) and high-end cloud computing will impact sourcing for certain components in 2024. Despite global CHIPS Acts like the European Chips Act and Chips and Science Act 2022 incentivising semiconductor manufacturing, new fabrication plants (fabs) will prioritise next-generation chip investments as AI and hyper-scale cloud computing markets grow.

What strategies can buyers employ to mitigate supply chain disruptions now and in the future?

Though many anticipate chip inventory rebalancing and normalisation come early 2025, the chip supply chain will continue to face challenges and constraints. In this environment, buyers should remain cautious and develop strategies that help minimise risk.

Here are three strategies that buyers can employ to mitigate risks now and in the future:

• Build a supplier network: Build a network of resilient suppliers, globally and locally. This gives you options when shortages arise and lowers the risk of disruption.
• Be proactive: Recognise supply chain disruptions and adapt quickly. Don’t wait for issues to build.
• Leverage advanced analytics: Choose reliable, up-to-date sources for market forecast information and consult with multiple players in the industry—partners, suppliers, customers, and even competitors—to inform your approach

Market Trends and Forecasts

What are the current and emerging trends in the electronic component markets, and what are the projections for 2024?

Demand higher than forecast, technology export regulations and delayed wafer fabrication facility starts have the potential to impact shipments until 2026.

How is the demand for specific components like semiconductors expected to evolve in the coming year?

As fabs move away from producing legacy components and larger node sizes, OEMs will find it increasingly challenging to source legacy parts through manufacturers and traditional distribution networks.

Wafer supply across all manufacturing node sizes is expected to be outpaced by demand post-inventory recovery (from 2025 to 2027). The most significant supply/demand imbalance will be in the >=65nm node size, where Open Market Distributors are best positioned to fill gaps in supply. Post inventory correction, supply/demand imbalances for legacy and current generation components are expected to continue as there is limited new supply expected despite a consistent demand outlook. In addition, AI, the cloud and embedded space is expected to have above-average growth driven by high underlying demand for edge, data centres, equipment and the continued proliferation of IoT products.

The automotive industry is also undergoing a major shift, which could impact chip supply in a positive way. In the midst of a slowdown in consumer demand for electric vehicles (EVs), electric car companies have ramped up production of partial hybrid vehicles, also known as plug-in hybrids (PHEVs). From a semiconductor market perspective, this is a good thing for certain players. Partial hybrids require fewer chips than pure EVs and some different types of components. As auto manufacturers de-emphasise pure electric vehicles in favour of PHEVs, it will free up semiconductor supply for those remaining in the market. Specifically, there will be increased availability of chips with mature node sizes greater than 28nm. This could also benefit those in the partial hybrid space and support their continued growth.

What to Expect in Part Two

Part two of the Electropages interview with Frank Cavallaro addresses some really important factors and gives some fantastic insight on vendor relationships, obsolescence, end-of-life (EOL) notices, data-driven procurement and cost management. Stay tuned!

About A2 Global Electronics + Solutions

A2 Global Electronics + Solutions, established in 1989, is a prominent player in the distribution of electronic components and supply chain services. Originally known as America II Electronics, the company merged with Advanced MP Technology to form A2 Global, leveraging over 40 years of experience in the industry. 

The company specialises in a variety of solutions, including component authentication, shortage mitigation, inventory solutions, obsolescence management, and global sourcing. Headquartered in St. Petersburg, Florida, A2 Global operates multiple distribution centres worldwide, serving industries such as automotive, defence, aerospace, medical, and more. 

Visit https://a2globalelectronics.com/ to learn more.